Progress Point One-B Condominium Association, Inc. v. Progress Point One Property Owners Association, Inc.

Decision Date02 March 2015
Docket Number14 CVS 467
Citation2015 NCBC 20
CourtSuperior Court of North Carolina

Boxley, Bolton, Garber & Haywood, LLP by Ronald H. Garber, Esq. for Plaintiff Progress Point One-B Condominium Association, Inc.

Shanahan Law Group, PLLC by John E. Branch, III, Esq., Brandon S. Neuman, Esq., and Jeffrey M. Kelly, Esq. for Defendant Progress Point One Property Owners Association, Inc.


McGuire, Judge.

THIS CAUSE, designated a mandatory complex business case by Order of the Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. § 7A-45.4(b) (hereinafter, references to the North Carolina General Statutes will be to "G.S."), and assigned to the undersigned Special Superior Court Judge for Complex Business Cases, comes before the Court upon Defendant's Motion to Dismiss and Alternative Motion for More Definite Statement, [1] pursuant to Rule 12(b)(6) and Rule 12(e) of the North Carolina Rules of Civil Procedure ("Rule(s)"). On February 13, 2015, the Court held a hearing on the Motions.

THE COURT, after considering the Motions, briefs in support of and in opposition to the Motions, arguments of counsel and other appropriate matters of record, CONCLUDES that the Motions should be GRANTED, in part, and DENIED, in part, for the reasons stated herein.


1. On February 12, 2014, Plaintiff Progress Point One-B Condominium Association, Inc. ("Plaintiff") filed a Complaint against Defendant Progress Point One Property Owners Association, Inc. ("Defendant"). Plaintiff's action was designated No. 14 CVS 467 by the Clerk of Superior Court of New Hanover County. On February 28, 2014, before any responsive pleading was filed, Plaintiff filed an Amendment to Complaint (together, the Complaint and Amendment to Complaint will be referred to as "Amended Complaint").

2. The Amended Complaint contains fourteen causes of action ("Claims"). The Claims, as they appear to the Court, are as follows: Claim One (Collection of Assessments improperly levied), Claim Two (Declaratory Judgment), Claim Three (Conversion), Claim Four (Breach of Fiduciary Duty), Claim Five (Unjust Enrichment), Claim Six (Punitive Damages), Claim Seven (Demand for Accounting), Claim Eight (Demand for Access to Documents), Claim Nine (Declaratory Judgment), Claim Ten (Recovery of Assessments improperly levied), Claim Eleven (Injunctive Relief/Specific Performance), Claim Twelve (Declaratory Judgment), Claim Thirteen (Declaratory Judgment), Claim Fourteen (Damages for failure to provide access to corporate records).

3. On June 30, 2014, Defendant filed the Motions seeking, primarily, dismissal of all claims pursuant to Rule 12(b)(6) and, alternatively, that Plaintiff be ordered to provide a more definite statement pursuant to Rule 12(e).

4. The Motions have been fully briefed and argued, and are ripe for determination.


Among other things, the Amended Complaint alleges that:

5. Plaintiff is a North Carolina corporation with its principal place of business in New Hanover County. Plaintiff is the owner of Lot 6 as described in New Hanover County Book of Maps 44, Page 206.[2]

6. Defendant is a North Carolina corporation with its principal place of business in New Hanover County.[3]

7. The Amended Complaint does not allege what the relationship is between the Plaintiff and Defendant. From information provided in Plaintiff's brief and by Plaintiff's counsel at oral argument, the Court understands the Plaintiff to be a member of Defendant property owners association.

8. Defendant has authority to levy assessments from members of its association pursuant to unidentified "governing documents, " but Plaintiff alleges that Defendant has exercised such authority and collected assessments under a "null and void" agreement, and not under the appropriate "Protective Covenants."[4] These assessments include General Assessments, Special Assessments, Dumpster Assessments, Storm Water Assessments, and Lots 3/5/6 Storm Water Assessments.[5] The Amended Complaint does not identify the specific dates or amounts of the assessments.

9. Plaintiff alleges that some, if not all, of these assessments were improperly levied by Defendant and, in doing so, Defendant has collected funds it has no right to collect from Plaintiff.[6] Among the assessments allegedly improperly levied by Defendant was an assessment for an erosion control pond serving several parcels under the management and/or ownership of Defendant.[7]

10. The Amended Complaint alleges that Defendant made the assessments "under the claimed authority of a document entitled Commercial Property Management Agreement dated June 30, 2014 (hereinafter referred to as 'CPMA')."[8] Plaintiff alleges, however, that the CPMA "confers no authority actual, nor apparent, upon" Defendant to perform the acts of which Plaintiff complains.[9]

11. Plaintiff alleges that Defendant has converted funds received on account of these assessments and that Defendant has been unjustly enriched by Plaintiff's payment of the improper assessments.[10] Moreover, Plaintiff alleges that it is entitled to an accounting and inspection of Defendant's records related to these assessments, and that it should recover damages for Defendant's refusal to permit inspection rights and for the assessments improperly levied and paid.[11]

12. Plaintiff also alleges that there exist a number of actual and genuine controversies between Plaintiff and Defendant for which Plaintiff is entitled to seek declaratory relief including: what assessments Defendant may collect;[12] what, if any, authority is conferred on Defendant by the CPMA;[13] the identity of the proper officers, directors, and registered agent for Defendant, and other corporate governance matters related to Defendant;[14] and how assessments should be levied in relation to the erosion control pond.[15]


13. The Court, in deciding a Rule 12(b)(6) motion, treats the well-pleaded allegations of the complaint as true and admitted. Sutton v. Duke, 277 N.C. 94, 98 (1970). However, conclusions of law or unwarranted deductions of fact are not deemed admitted. Id. The facts and permissible inferences set forth in the complaint are to be treated in a light most favorable to the nonmoving party. Ford v. Peaches Entm't Corp., 83 N.C.App. 155, 156 (1986). As our Court of Appeals has noted, the "essential question" raised by a Rule 12(b)(6) motion is "whether the complaint, when liberally construed, states a claim upon which relief can be granted on any theory." Barnaby v. Boardman, 70 N.C.App. 299, 302 (1984), rev'd on other grounds, 313 N.C. 565 (1985) (citations omitted).

14. A Rule 12(b)(6) motion should be granted when the complaint, on its face, reveals (a) that no law supports the plaintiff's claim, (b) the absence of facts sufficient to form a viable claim, or (c) some fact which necessarily defeats the plaintiff's claim. Jackson v. Bumgardner, 318 N.C. 172, 175 (1986).

15. A motion for a more definite statement pursuant to Rule 12(e) should be granted when "a pleading to which a responsive pleading is permitted is so vague and ambiguous that a party cannot reasonably be required to frame a responsive pleading." G.S. § 1A-1, Rule 12(e). A motion for a more definite statement should only be granted if the pleading fails to meet the requirements of Rule 8 and, therefore, fails to give notice to the opposing party of the nature of the claim. See Ross v. Ross, 33 N.C.App. 447, 454 (1977). Although generally disfavored, a motion for a more definite statement "rests in the sound discretion of the trial judge." Id.

Claim Three (Conversion)

16. In North Carolina, conversion is defined as: "(1) the unauthorized assumption and exercise of the right of ownership; (2) over the goods or personal property; (3) of another; (4) to the exclusion of the rights of the true owner." Estate of Graham v. Morrison, 168 N.C.App. 368, 371 (2005). "At its core, conversion 'is not the acquisition of property by the wrongdoer, but a wrongful deprivation of it to the owner . . . .'" Tai Sports, Inc. v. Hall, 2012 NCBC 62, ¶ 108 (N.C. Super. Ct. 2012) (quoting Lake Mary L.P. v. Johnston, 145 N.C.App. 525, 532 (2001)). Ultimately, there are "two essential elements [that] are necessary in a complaint for conversion – there must be ownership in the plaintiff and a wrongful conversion by defendant." Lake Mary, L.P., 145 N.C.App. at 532.

17. "Where there has been no wrongful taking or disposal of the goods, and the defendant has merely come rightfully into possession and then refused to surrender them, demand and refusal are necessary to the existence of the tort." White v. Consol. Planning, Inc., 166 N.C.App. 283, 310-311 (2004) (internal citations omitted). Upon the making of a required demand, the "absolute, unqualified refusal to surrender . . . is of course a conversion." Hoch v. Young, 63 N.C.App. 480, 483 (1983) (internal citations omitted).

18. Additionally, where the property at issue is money, "[t]he general rule is that money may be the subject of an action for conversion only when it is capable of being identified and described." Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 528 (2012). This identification does not require tracing of actual currency, but that a specific sum be identified that is subject to the alleged conversion. Id. at 528-29. See also Wake County v., L.P., ___ N.C.App. ___, 762 S.E.2d 477, 489-90 (2014) (finding that plaintiff's claim for conversion based on defendant's withholding of tax overpayments was properly dismissed where the plaintiff identified only "a category of monies allegedly owed" and did not adequately identify the money allegedly converted by, inter alia, "specific amount" or other identifying...

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